Investigation: Debt Collectors, the N-Word and Bank of America

Two days after being confronted by ABC News, Bank of America has fired a debt collection agency whose operators used racist and obscene phone calls to collect debts from bank customers. "What's up, you f---ing n---r?" said one of the collection agents in a message to 32-year old Allen Jones of Dallas, who owed $81 on his Bank of America credit card. Jones, seen here, was awarded more than $1.5 million after filing a lawsuit.

Two days after being confronted by ABC News, Bank of America has fired a debt collection agency after several of its operators were caught using racist and obscene phone calls to collect debts from bank customers.

"What's up, you f---ing n---r?" said one of the collection agents in a message to 32-year old Allen Jones of Dallas, who owed $81 on his Bank of America credit card.

"This is your f---ing wake up call, man," the debt collector said in a message left at Jones' home at 6:30 a.m.

Debt Collector Had Served Time In Prison

In the course of the investigation for trial, Jones' lawyers found that one of the callers was a supervisor who had been hired just seven months after leaving prison.

"They lived a thug life," said one of Jones' lawyers, Mark Frenkel, of the ACT operators. "They have a prison mentality."

Despite the verdict, Bank of America continued to use ACT, accepting the company's explanation that these calls were made by rogue employees, until the bank CEO, Brian Moynihan, was given a copy of the taped calls and questioned about the use of the agency.

"That would not be acceptable to me," said Brian Moynihan when told of the language and tone of the calls.

Within two days, Bank of America notified ACT its services were no longer needed, "as a result of what was raised here," said ACT chairman Chris Debbas.

Bank of America said its decision to terminate ACT was not related to the ABC News investigation, but because of issues surrounding the economy.

The ACT chairman said Bank of America had been supportive of his company, even after the verdict, and had not acted until after the ABC News interview with Moynihan.

ACT has since made management changes, according to its chairman, who said the phone calls were "deplorable."

"I worked very hard to build this company and our management team and it is unthinkable that somebody would call somebody and do that," Debbas told ABC News. He declined to identify other major corporate clients but said they continue to his firm's collection services.

"Everybody understands in this business how hard it is, everybody was outraged by what they heard, and I was indignant," said Debbas.

Debt Collectors Number One Source of Complaints to the FTC

For the last three years, complaints about debt collections and their tactics have been the number one source of complaints to the Federal Trade Commission. In the first half of 2010, the FTC received over 65,000 complaints from consumers.

"There is this huge amount of debt moving through the system," said the FTC's director of Consumer Protection, David Vladeck. "There's no question that there are serious abuses taking place in this industry," he told ABC News.